Best Startup
All businesses have expenses regardless of the size or industry in which they operate. However, keeping track of your business expenses can be tricky, especially if your employees frequently make purchases on behalf of the business. One way to streamline the process and make it easier is to think about procuring corporate credit cards. So, let’s get into it.
What Is A Corporate Credit Card?
Corporate credit cards tend to be for larger businesses, with small businesses being offered a small business credit card. The application process differs between providers, as does the package itself. For example, payhawk.com offers a corporate card as part of its money management package, which also includes reimbursements, expense management, bill payments, and accounting info. The repayment process also depends on the provider, so be sure to read the fine print so that you know what you are agreeing to.
Corporate Cards vs Small Business Credit Cards
Both forms of business credit cards are designed to offer the user control and convenience, but there are a few ways in which they differ. Firstly is the availability; some corporate cards can only be given to businesses of a certain size or profit threshold. Whereas small business credit cards are available to businesses of almost any size, from single entrepreneurs up to businesses that then cross over into qualifying for a corporate card.
The second way in which they differ is the responsibility of the debt. Small business credit cards are usually issued on behalf of an individual; regardless of how many credit cards are given to a small business, the owner alone is often responsible for organizing payments and absorbing the debts. In addition, the owner often has to act as a guarantor for the card.
On the other hand, with corporate credit cards, the company is usually the one that is liable for the debt incurred on the cards, which can be extremely advantageous for the owners of the company. Although you can find corporate credit cards which do offer individual liability, in this instance, the employee using the card is responsible for paying the debt in the short term before being reimbursed by the business.
The Pros & Cons
There are several perks to using a business credit card for your expenses. Firstly, it simplifies the tracking and analysis of work-related expenditures. There is a card that should work for your business regardless of size. Some providers offer rewards and benefits for businesses when signing up with them. Offering a company credit card to your employees shows that you trust them. However, there are also downsides. Some business cards have exorbitant fees for their usage, and the application process can be long and tedious.
Business Cards And Credit
A business credit card can obviously be used to make work-related purchases, from office supplies to travel and accommodation. In using your business card for purchases of all forms and sizes, you are able to begin building your small business’s credit profile. You can also avoid having to make these purchases on your personal credit cards to avoid racking up charges and interest on your personal accounts.
In some instances, depending on the type of card and provider, the employees given the card are registered users. Because the employees are authorized users, the card activity might be reported and impact their personal credit. This is often a drawback for a lot of employees if they make costly purchases that impact their personal credit, and they want to apply for loans or financing in the near future. That being said, not all card providers do this, so if this is something that concerns you or your employees, you can find cards that won’t affect your employees’ personal credit.
Is A Business Credit Card Worth it?
It is difficult to answer this question because it depends entirely on your business. If you already have a system in place and it works for you, then it might not be wise to mess with it until you need to, like if your business begins to expand or you take on more staff. There are a lot of advantages to using a business credit card, from building your business’s credit to making it easier to track your business’s expenses.
The Bottom Line
A business credit card might not be on your radar as a small business owner; it is easy to dismiss them as a tool for bigger businesses, but this is not the case. All businesses have expenses and outgoings that need to be dealt with and kept track of. As a small business, securing a line of credit can help you if you are struggling to make all the purchases necessary for the operation of your business. It is definitely worth considering, so do your research to determine whether it makes sense for your business.
